<< This car has 68K miles and is in great condition but has a salvaged title. With a clean title this car sells for 10 - 12K. I don't know very much about salvaged titles but I probably won't keep the car very long and am worried about trying to sell it later. Hope a new thread on this ok... thanks for the input in advance!! >>

IMHO you should only buy this car if you are plan to keep it for a long time - it will have very poor resale value.

Empty Wallet responded:

<< There is a reason why DMV gives a car a "salvage" title!! Everything looks and runs great but there is something terrible hidden inside..you just don't know because the body shop mechanic did a great job of covering them up! If you decide to buy this car, forget about being able to sell it..no one will buy it! >>

rvtips responded:

<< Buy it only if you plan to keep it forever,VERY hard to sell with salvaged title!! >>

pato observed:

<< Those online guides like Edmunds won't provide any appraisals on branded cars-you would likely need to get an independent appraisal. >>

crazytree wryly cautioned:

<< go ahead and buy it..and take the extra money and put it in the bank..when you get in an accident and the car crumples like a soda can..you can take the money you saved to buy a really nice electric wheelchair. >>

roamerr pointed out:

<< Only buy salvaged title if you know the reason and the person that did the repairs.Too risky otherwise. >>

Yes. However, I would be slightly cautious about paying a premium for a "Certified Pre-Owned" vehicle.

Last year Consumer Reports documented how several "Certified Pre-Owned" vehicle owners (i.e. Mercedes-Benz, Jeep, and other luxury makes) had been victims of "washed" titles and odometer fraud. The article cited the extraordinary amount of fraud involving accident-damaged luxury cars, where the vehicle titles had been transferred between states and "washed". At least one CU customer of a Mercedes-Benz "Certified Pre-Owned" vehicle discovered that his 2-year-old car (for which he paid around $45,000) had been horribly demolished in a prior accident. Eventually the M-B dealer took back the vehicle, but CU discovered that the car's VIN was again registered as it had been sold again to another unsuspecting customer under the "Certified Pre-Owned" branding.

Other replies:Boilerfan wrote:

<< You can lease a used car. Check out your local yellow pages for auto leasing companies and talk to some dealerships to find the best programs in your area. Do all the math though, often leasing rates when calculated as an APR are much higher than you could finance it for. If all you care about is monthly payment however,lease may offer you the best option. >>

Woodie 1 observed:

<< Any dealer that wants to can lease a new or used car to you . They just have to have someone who will buy the car and rent it back to you. Some don't want the bother, others welcome the business. >>

Alcibiades quipped:

<< Get a Z >>

Zender noted:

<< I leased two used cars when I was in my early twenties and couldn't afford a down-payment. They were both leased through leasing companies though (as Boilerfan suggests) and not through conventional car dealers. >>

Crazytree observed:

<< I tried to lease a used car but the payments were actually higher than the purchase payments... if you believe that. >>

Sexecutioner responded:

<< my best friend just got a z, and let me tell you... those cars are sweeeeeet. but i don't want to cramp his style....i am just looking into the s2000, this isn't definite... but i appreciate your help....is it usually not worth it to lease a used car? do they give you different rates? or do they estimate the figures differently than they would a new car with no depreciation? >>

Yoslov replied:

<< Why not assume someones current lease. Try either of these sites www.swapalease.com or www.leasetrader.com. Both sites have current lease holders who are trying to get out of their current leases and sometimes pay big incentives for someone to assume their lease. Good Luck on the new ride.Leasetrader link Swap a Lease Link >>

PingPingFuu added:

<< You have to pay for swapalease I tried to look at some things, site looks nice but I dont want to pay for something I wont use. >>

Another aspect of automotive finance loans which borrowers need to pay attention to is "interest calculation" and "loan amortization".

Some auto-dealership finance plans use the old-fashioned "Rule of 78" amortization method. In a Rule of 78 loan, the interest for the entire period of the loan (i.e. a a 60 month loan) is calculated as a total finance charge and deducted in full from the early payments of the loan. On an amortization table, this would mean that your first year or more of payments would entirely be allocated to INTEREST, not to PRINCIPAL.

Among the drawbacks of a Rule of 78 loan (from a consumer perspective):

1. During the critical first few months of a loan, the repayment scheme means the borrower does NOT pay down ANY principal on the loan. This compounds the common problem of borrowers being "in the bucket" where they owe more on the vehicle loan than its fair-market disposal value.

2. The lender's likelihood of earning ALL their interest up-front is greater than with a standard simple-interest installment loan.

If borrower refinances the vehicle after one year at a lower interest rate - or sells the vehicle and pays off the loan - borrower actually loses a huge amount of pre-paid interest, since the first year or so of payments were almost entirely allocated towards prepayment of loan interest rather than computed on a simple-interest basis on the loan's remaining dollar balance and term.

3. Lenders do not necessarily offer the borrower a "better deal" on loan terms and conditions than on a standard loan, and lenders often do not clearly explain to the borrower how the "fine print" of this kind of loan stacks the deck against the borrower building equity.

Millions of American car buyers have had Rule of 78 loans over the years and not realized it, particularly if they faithfully paid off the loan until maturity. However, these loans prolong the length of time the typical car buyer is "in the bucket". It provides higher profits and a higher guaranteed interest yield for the lender, with no corresponding benefit for the borrower.

Alcibiades

Senior Member - 10K

posted: Jul. 23, 2003 @ 5:32p

So the Rule of 78 sums up the interest in total before the loan ends ?

<< For a borrower looking to end an auto loan early, there isn't a worse way a lender could calculate your payoff amount. The Rule of 78s formula packs extra interest charges into the early months of a loan. Using Rule of 78s, a lender typically collects three-quarters of a loan's interest in the first half of a loan term. >>

<< Outside of banking circles, the Rule of 78's is little understood, even though it is commonly applied to many consumer and business loans. For the borrower, it tends to have a pernicious effect in the nature of a hidden prepayment penalty. The borrower's disadvantage is heightened by the fact that the operation of the Rule of 78's is often referred to as a "Rebate of the Finance Charge." Any consumer who heard the word "rebate" is always tempted to say, "Where do I sign?" >>

<< In Mississippi and other states, it is a method of figuring your cost and refund of credit insurance and/or finance charges on a precomputed credit transaction. A "precomputed" account is one which the account balance includes the finance charge and each month the full payment is subtracted from the balance. If the account pays off before maturity, a rebate of the unearned finance charge is given based on a method called "the Rule of 78s." >>

Uhhh. Another thought: Dang it! Dang it! Dang it! I wish I had this KNOWLEDGE before! I am upside down and in the bucket (terminology I learned from you or links in this thread). Anyway, I have a situation similar to a couple I read about but am looking for confirmation or other risks to consider. I am $3-$4,000 upside down on my 2002 car, thanks to that evil Rule of 78. I CAN continue making the payments, but don't want to because I'd like to save more money and also get a different (less expensive) car "down the road." I HAVE a beater that I can drive for now that meets my basic needs. So, if I can borrow the $4,000 on my VISA for 4.99% life of loan... or even the entire $20,000 owed (My car loan is 7%)... Does it make sense to pay the loan off with the VISA, get the title, sell car, then pay down the remaining ($3-4,000) on the VISA? I don't really want any of the cheap low interest new car alternatives. I'd rather get out of debt then buy a gently used car of my choice. Thanks in advance for any advice!

that cavalier post is not a valid deal....the $4000 rebate does not apply to the model in the thread, so its not just YMMV, its not possible at all.

SeattleNative

Senior Member - 1K

posted: Oct. 21, 2003 @ 9:00p

SIS has an excellent point: oftentimes, auto makers' cash incentives do not apply to certain trim lines (i.e. the base model or a limited-edition model).

For those of you who browse newspaper ads to find promotional-priced "Ad Cars", where dealerships offer 1 to 5 cars at an extremely deep discount off MSRP, be very careful to use a magnifying glass for the following restrictive discounts, which you MAY NOT be eligible for:

* "College Grad Rebate", typically $400 to $1000, is restricted to persons earning a degree in the past six months. The rebate isn't offered if you graduated in '84 or '97, sorry.

* "Military Rebate", typically $750, is restricted to persons with a military affiliation. Sometimes this includes retired or reserves, but read the fine print.

* "Lease Loyalty Rebate" typically $500 to $1000, is restricted to persons with a current (same-brand) lease vehicle being traded in.

*"Owner Loyalty Rebate", typically $500 to $1000, is restricted to persons who currently own a same-brand vehicle, sometimes requiring a trade-in but not always.

*"FMCC/GMAC Finance Rebate" (i.e. "FDAA Rebate&quot, typically $500 to $1000, is restricted to car buyers who will finance their purchase through the car manufacturer's captive financing subsidiary. You might not get as low of a rate as you would through a credit union.

RETOOFERAB

Member

posted: Oct. 22, 2003 @ 10:16a

SUCKISSTAPLES said:

<< that cavalier post is not a valid deal....the $4000 rebate does not apply to the model in the thread, so its not just YMMV, its not possible at all. >>

...still, there's some good discussion in there. Thread title not to be confused with an ad.<img src="i/expressions/face-icon-small-smile.gif"border=0>

Now that you financial wizards are back, any response to my initial question a few posts up in this thread? I am guessing after reading more of your suggestions, that I could open a new cc with 0% balance transfers and do what I asked about. But any direct answer would be appreciated. Thanks in advance! <img src="i/expressions/face-icon-small-happy.gif"border=0>

dcwilbur

Ancient Member

posted: Oct. 22, 2003 @ 10:32a

<< roamerr pointed out: only buy salvaged title if you know the reason and the person that did the repairs.Too risky otherwise. >>

A friend of mine once bought back his own vehicle. His car was wrecked and the insurance company totalled it and gave him a check. He bought the car from the salvage yard, got the salvage title and had the repairs done himself. I can't remember the figures, but he got the car back on the road for MUCH less than the settlement, and he drove it for years.

If you explain why it would probably help create better posts rather than to simply state your dissatisfaction. SN has done probably the best (and hardest) work in this forum to create the FAQ threads and find all relevant threads to put in one place.

elhumano

Cranky Member

posted: Oct. 23, 2003 @ 12:35a

Sorry, I should have been more clear. The thread I was reading was quite a good one, and by shunting discussion here, the mod makes you think that you will find the same discussion already having begun. Instead, I didn't. In place of what I was expecting was masses of info about cars in general (which is fine), yet no opportunity to discuss the locked thread!

Please excuse me a bit for jumping the gun, but it is late out here!

SeattleNative

Senior Member - 1K

posted: Oct. 23, 2003 @ 8:10a

Retooferab asked:

<< So, if I can borrow the $4,000 on my VISA for 4.99% life of loan... or even the entire $20,000 owed (My car loan is 7%)... Does it make sense to pay the loan off with the VISA, get the title, sell car, then pay down the remaining ($3-4,000) on the VISA? I don't really want any of the cheap low interest new car alternatives. I'd rather get out of debt then buy a gently used car of my choice. >>

If your intention is to get rid of the car and pay off the balance owing using your VISA, and drive an interim "beater car", using an ultra-low-rate VISA does make some sense. You are asking the right questions.

One idea might be: once you've paid off your car using the VISA, don't use that VISA account for any other purchases. That way you are focused on paying down the balance of your former car loan, and not co-mingling the same account with other purchases.

What do other FW'ers think about Retooferab's idea of paying off his "in the bucket" car using his low-rate VISA, getting the title, selling it, and then using his low-rate VISA to pay off the deficiency (i.e. $4,000) rather than stay locked into steep car payments?

SeattleNative

Senior Member - 1K

posted: Oct. 23, 2003 @ 8:19a

Elhumano: Fatwallet's key moderator "locks up" message threads which are inactive for a certain period of time (90 days?). Perhaps several of us should e-mail our "Chief Mucky-Muck" about having the capacity to reopen those archived threads.

My intention in creating this FAQ was to gather, in one place, links to as many auto/car buying threads (and some external links) as possible. This was part of an effort, by several of us at FW, to improve the quality of discussions - people could see if some of their common, frequent questions had already been answered in prior discussions.

Your feedback is welcome. Perhaps our moderators might also be a bit gentler in guiding people to check the FAQ threads before posting. Sometimes someone has new information or ideas relating to an old thread topic, and the relevant old thread has been "archived".

"After further review..." I unlocked the thread and still pointed users here for more info. You can always alert moderators yourself and state your case. They are reasonable people, but it's late over here sometimes too, and more information can be helpful.<img src="i/expressions/face-icon-small-smile.gif"border=0>

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